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Pound slides after May says UK will trigger Brexit in March

The British pound slumped to a fresh three-year low against the euro on Monday (Aug 15) and edged lower on the US dollar, as signs of weakness mounted in the British economy.

ST PHOTO: DESMOND FOO

[SINGAPORE] The pound fell against all but one of its 31 major peers after British Prime Minister Theresa May said she'll begin the UK's process of withdrawal from the European Union in the first quarter of 2017.

Sterling was about one per cent from the 31-year low set in the days following the nation's shock decision in a June 23 referendum to leave the EU. A gauge of the US dollar advanced as traders sought the safest assets after Ms May hinted she's leaning toward a so-called hard Brexit, and before US payrolls data due later this week that will help determine the Federal Reserve's next policy move.

"We're back to the Brexit risks," said Vishnu Varathan, a senior economist at Mizuho Bank Ltd in Singapore.

"Sterling has taken a bit of knock first. If the concerns become wider concerns about financial market contagion, we will find that the slight softening that we've seen in the dollar trend will be shaken off."

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The pound fell 0.3 per cent to US$1.2932 as of 9:52am in Tokyo. It reached US$1.2798 on July 6, the weakest level since 1985. The Bloomberg British Pound Index, which measures the UK currency against major peers, has lost 14 per cent since the referendum.

The Bloomberg Dollar Spot Index, which tracks the currency against a group of major peers, gained 0.1 per cent. The gauge declined 0.4 per cent in September.